Overview

1. Theoretical background

2. Research question, justification and hypotheses

3. Description of variables

4. Methodology

5. Preliminary results

6. Conclusions

‘The challenge of our time’

Some ‘crude’ facts about inequality

• The richest 1% of the population is wealthier than the rest of the world combined.

• In 2010, 388 individuals had the same wealth as 3.6 billion people.

• In 2015, this share of population further narrowed to 62 people.

• In the last 15 years, the average annual income of the poorest 10% of people in the world has risen by less than a single dollar cent per year.

Economic growth triggers inequality

• Inverted U hypothesis
  • the concentration of savings in the hands of the upper social classes
  • the rise in the urban share of the population

Inequality hampers economic growth

• Political instability;
• rent-seeking activities threatening property rights;
• reduced investment in education;

Rational choice theory

• preferences, constraints and prices affect consumers’ choice
• Indivuduals are rational and use information to determine which options are available, rank them and choose the most preferred one
• goods posses inherent and unique characteristics
• utility maximisation is a matter of arranging spending to to achieve the highest total utility

Behavioural economics

• Cognitive, social and emotional variables influence consumers’ choice.

Inequality and consumption behaviour

Consumption behaviour differs according to social status

Research question

How the rise in inequality, economic growth and usage of public transportation influences the purchase of cars (as an example of luxury good) in Singapore, from 1995 to 2014.

The case study

A successful developing economy…

The case study

… With a world class transportation system and policies deterring the purchase of private cars

Hypotheses

• H1: The higher the economic growth, the higher the purchase of luxury cars

• H2: The higher the inequality, the higher the purchase of luxury cars

• H3: The less usage of public transport, the higher the purchase of luxury cars